Smart management can only take you so far, and so the University is also looking to increased fundraising and investment returns to maintain and strengthen its competitive position in the years ahead.

The laments that were voiced in 1925 at the start of Penn’s first fundraising campaign still resonate today, says Vice President for Development and Alumni Relations John Zeller, who will be running its next one. “People say, ‘You’re incredibly wealthy,’” given the University’s multi-billion dollar endowment, “yet in terms of its mission and activities, Penn is significantly under-funded.”

As high as they are$32,364 this year at Penntuition and fees don’t come close to covering the cost of education, and can only be raised by so much, while federal, state, and local sources of support and other contractual revenue sources “have been diminished or restricted,” Zeller says. Beyond the percentage of operating budget it accounts for, philanthropy, as one of the “last influenceable revenue streams,” is a “critical, critical component to the success of an institution.”

Penn is coming off a very successful year of fundraising in FY2005, raising $443 million in new gifts and pledges and $394 million in cash receipts. Both represent sizable increases over the previous year, and are close to the record amounts posted in FY2003which, however, included a $100 million contribution from the Annenberg Foundation. There were 83 gifts of $1 million or more, which was a new record, including 33 first-time donors at that level. The number of new scholarship funds established140also set a new mark; $32 million went to financial aid, of which $29.4 million was for endowment.

According to a survey by the Council for Aid to Education released in February, Penn’s $394 million in cash was good for fourth place among university fundraising programs. Besides being a source of departmental pride, such rankings send a message externally, says Zeller. “It signals the strength and confidence that its constituency has in the institution. And I think the upward trajectory that development and alumni relations has enjoyed over the last 10 yearsand particularly over the last five yearsis a very powerful signal.”

During FY2001-2005, gifts and pledges have increased from $372 million annually to $443 million, while cash receipts have grown from $266 million to $394 million. Zeller notes that last year’s totals represent strong showings at both ends of the gift spectrum. There were 127,000 gifts under $100,000, accounting for $111 million, or more than a quarter of the total. “So when somebody says I can only give you $50, or $100, or $500, the importance of that as a cumulative-type of giving level can never be understated,” he adds. Annual giving programs, which generally attract smaller donations, raised $43.3 million last year, up 13.3 percent from FY2004.

The increase in $1 million-plus gifts is a mixture of demographics and the explosion of wealth in the 1990shalf of Penn’s alumni population graduated in the last 20 years. The most successful have accumulated wealth, and “as they begin to be in a position to make gifts, they’re starting to do that,” says Zeller.

Ability to give, of course, is only half the equation. “You look at the continuum of philanthropy and it begins with engagement,” he adds, which is where alumni relations, the Gazette, and other linkages and communications come in. “When people are least able to afford to make contributions is when the institution has to sustain those relationships and continue them,” he says. “A lot of the success we are enjoying today has to do with a lot of hard work over the last 20 years.”

Zeller came to Penn in January 2005 knowing that a major campaign was in the cardsand eager to run it. In his previous post as vice president for development and alumni relations at Johns Hopkins Medicine and the Johns Hopkins Institutions, he raised more than $1.5 billion over two fundraising campaigns, starting the second the day after the first one ended.

Nearly a billion dollars was raised to support the Agenda for Excellence in 1995-2000, and several Penn schools have had campaigns running in recent years, but this will be the first University-wide effort since the Campaign for Penn, which was the first to break the $1 billion mark when it concluded in 1994. Currently in what is known as the “quiet phase,” Penn’s next campaignscheduled to be formally announced in late 2007is likely to seek $3 billion or more, though no official number has been determined yet. “There’s always a pressure to put a very large number on the board,” says Zeller, “but the key to campaigns today is the impact that they can have on the institution and its mission.”

Besides raising the sights of donors in terms of what they might consider as a gift“it’s a unique, creative time in the history of the institution”campaigns also create a heightened institutional focus. “What’s important? What is it that you want to say? Where do we want to be at the end of seven years that we aren’t today? What is the impact?” says Zeller. They also engage people in a variety of ways, creating a rallying point for donors, volunteers, other alumni, and staff. “There’s an accelerated pace to everything you do.”